Jesper Brodin, CEO of Ingka Group, the majority owner of Ikea stores worldwide, reiterated the company’s dedication to planned price cuts despite the challenges posed by Red Sea shipping disruptions. Speaking at the Reuters Global Markets Forum in Davos, Brodin emphasised the company’s commitment to prioritising lower prices for its customers.
“Our commitment is to make sure that we prioritise investing in lower prices for our customers,” he said.
In response to questions about the impact of shipping disruptions caused by Houthi attacks in the Red Sea, Brodin assured that Ikea is standing by its decision to implement price reductions.
The attacks, carried out by Houthi militants in Yemen, have led to significant disturbances in global commerce, with shipping companies rerouting vessels around the southern tip of Africa, resulting in longer and more expensive journeys.
According to Reuters, Brodin disclosed that Ingka Group has invested over €1 billion (RM5.1 billion) in price reductions across its markets from September to November, and the company intends to persist in lowering prices throughout 2024.
Despite the disruption in global supply chains and the potential increase in transportation costs, Brodin expressed confidence in Ikea’s ability to absorb shocks due to sufficient stock levels.
While acknowledging the challenges of potential higher transport costs and inflationary pressures, Brodin noted that there is still “quite significant deflation” upstream in Ikea’s supply chain.
He emphasised the company’s stance on supporting consumers during a financially challenging period rather than solely focusing on optimizing profits.
“This is not a year for us to optimise profits. This is a year to try to navigate on a thinner profit, but to make sure that we support people,” Brodin affirmed.
In addition to addressing supply chain concerns, Brodin highlighted Ikea’s plans for expansion in China and India, citing a rebound in the Chinese market. Despite the complexities of the current economic landscape, Ikea remains committed to providing affordable solutions to its global customer base.
